Han Shan on Nostr: I might trade weed for propane, and the exchange rate might be geographically ...

I might trade weed for propane,
and the exchange rate might be geographically different,
but generally speaking
the rate is always track with the USD fiat denomination of each asset.

USD denominated
because that's the Units most things are Accounted for in.

Any time the unit pair deviates from the underlying UOA values, it's an opportunity for a trader to step in and make free fiat.

If weed is cheap versus propane, I can buy weed, flip it to propane, and sell it for free fiat.
This action *forces* the trading pair to tend towards the underlying fiat UOA values.

Basic economics.